Critiquing the Travel Technology Ecosystem

Aligning business operational models with ecological terms has become a popular pastime, especially in technology. Almost 20 years ago, Harvard academic James F. Moore developed the idea in his business strategy book, The Death of Competition.i

Refinements and corrections continue to the present day, but some of his fundamental premises have become part of the business landscape. The travel industry is no exception–albeit most people espousing the concept deviate significantly from the standard definitions and describe the ecosystem to meet their unique business objectives.

Travel Ecosystem 20140626.GIFEssentially, the basic theories say that businesses can best succeed when they consider their business environment, and not just their competition, or even meeting the needs of their customers. Various businesses and their services can contribute not only to delivering products and services that customers find valuable, but also toward making the business environment positive.

These disparate entities are often themselves suppliers and customers of each other, and hence form part of the ecosystem in multiple ways. Moore suggests that enlightened companies will enhance the ecosystem by creating mutually beneficial relationships not only with customers and suppliers but also with their competitors.

The accompanying graphic shows a simplified view of how the major components of the travel management process conceptually work together and reinforce both each other and the business environment.ii

Moore’s book also says that there is something called an “ecosystem leader,” which is a company that creates a shared vision that others can use to, for instance, align their investments. Much of the book is devoted to examples of how this sort of leadership has occurred.

Business Leadership Examined


The travel industry has never been in want of companies anxious to lead the ecosystem–almost always in directions and ways that they created and find beneficial. This is not a new idea, nor did it originate with Moore–much of whose work the travel industry amends so as to be unrecognizable.

Forty years ago a few large airlines with technology assets began projects that became CRS and later GDS. These represented the most tightly integrated ecosystems the industry has ever seen.

They were managed along the business strategies their owners desired to pursue, and they carried the industry to new levels of productivity that would not have been otherwise possible. Collectively, most of the CRS/GDS industry was also part of a larger ecosystem lead by IBM–which provided the tools that made them work.iii

The leadership position of the GDS has collapsed over the last 15 years, which most observers conclude was probably positive. Yet, some of our industry colleagues advocate assembling new ecosystems, of course organized around new leaders, as the best way to ensure innovation and proper attention to customer priorities.

Are they right? What can we learn from prior experiences in an industry organized in this way?

Ideas Aren’t Real


I’ve wondered why business ecosystems are such popular discussion points. Once you understand how they are supposed to work, and put the business school jargon aside, most examples are seriously flawed.

Ideas aren’t real, in that they are abstractions of how people think things should work, not how the do work. A few lessons from experience are in order:

  1. No one can guarantee that the vision held by the ecosystem leader is correct, or that the leader executes it properly. More often, that vision is deficient and in pursuing it, the ecosystem leader and its followers succeed in repressing competition and innovation.
  2. Remember, while the early advances of CRS/GDS brought undeniable benefits, innovation quickly became difficult, and usually grudging, especially elsewhere within the ecosystem. It encouraged that type of behavior and it was not until it partly collapsed that the broad product and service industry innovation we see today became practical.
  3. Most examples of ecosystem leaders and supporting business systems impose costs on the participants that would not otherwise be there. This is particularly true in the travel industry, where suppliers have complained about the costs of the GDS ecosystem for decades.iv
  4. Not all participants in ecosystems add value In travel, some companies that are assumed participants in fact detract from the value realized by other businesses and consumers.
  5. It is unnatural for a tightly-controlled business ecosystem to encourage the type of broad, aggressive competition that focuses on meeting customer needs, eliminating unnecessary costs, and by-passing non-contributors. The symbiotic business relationships ecosystems envision tend to perpetuate channels, intermediaries, and processes that competition would discard.
  6. Ecosystem abuses are frequent. Leaders inhibit or reject inconvenient innovations and competitors in favor of perpetuating the ecosystem they control.


Ecosystems Aren’t the Same As Progress


Despite the fairly infrequent examples of where ecosystems have benefited industries and their participants, the reverse is more common and more compelling: there are almost no commercially successful desktop operating systems apart from Windows because the Microsoft ecosystem is successful, not because Windows is better. Almost all TMCs use a GDS in some form, despite its limitations and costs to suppliers, not because there are no other ways to make reservations (many have been proposed) but because the remnants of the GDS ecosystem are with us still.

Travel management and technology needs more innovation, aggressive competition, and precise focus on real customer needs, not the artifices and limitations imposed by more business ecosystems. There are costs imposed by pursuing all of these things, but leader-based business ecosystems have never proven themselves to be cheaper or faster short-cuts, or effective hedges against inevitable business mistakes.

Notes:

i The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems, HarperBusiness, 1996, ISBN 0-88730-850-3.

ii This example is simplified to illustrate the concept and is not designed to be comprehensive. Contemporary illustrations of the travel ecosystem would be much more complicated and include lines of business with sometimes dubious contributions.

iii The extent to which IBM influenced the technological direction of the travel industry has never been fully appreciated.

iv There are other industry examples; this is just the most obvious and compelling.

Postscript – PeoplExpress

News reports on September 25 advised that the new PeoplExpress had lost half of its fleet on September 19 (consisting of two planes). The next day the company succumbed to subsequent operational challenges, resulting in cancellation of all service and stopped answering its phones. The company advises that it will “relaunch” October 16.

A few other commentators have observed that a company selling tickets without owning or directly operating the equipment used to fly the routes shouldn’t be called an “airline.” Whatever PeoplExpress might be, the media miss the point of an experiment so poorly conceived, planned, and operated.

One leased plane–down from two. A schedule with routes from Boston to New Orleans. Very few contingency plans–and inadequate one at that.

If this were a travel agency project, the criticism would be intense.

Sources:

The Myth of the Bell Curve

According to Josh Bersin (Principal and Founder, Bersin by Deloitte), business has a lot to learn about understanding and evaluating human performance and achievement. Some of the standard tools that have been employed for decades cause managers to draw imprecise and unacceptable conclusions.

“There is a long standing belief in business that people performance follows the Bell Curve (also called the Normal Distribution). This belief has been embedded in many business practices: performance appraisals, compensation models, and even how we get graded in school. (Remember “grading by the curve?”)

“Research shows that this statistical model, while easy to understand, does not accurately reflect the way people perform. As a result, HR departments and business leaders inadvertently create agonizing problems with employee performance and happiness.”

Read Josh’s complete, and very interesting, comments here.

Managers and Leaders

In a 1961 address, President John F. Kennedy called for the United States to commit itself to “landing a man on the moon and returning him safely to the earth” before the 1960′s ended. This goal was advanced together with a number of other national goals the president put forth at that time.

The space program, undoubtedly among the most enlightened and visionary initiatives of the 20th century, brought about untold advances in all scientific fields.  Among its short-term goals was to show the superiority of U.S. science, engineering, management, and political leadership.

Kennedy speaks of the initiatives he has just announced and says that we choose to go to the moon in this decade and do the other things,

“Not because they are easy, but because they are hard.”

Few of us will be called upon to motivate an entire nation to action, but in the small ways we are asked to lead others, remember Kennedy’s words and also remember that doing hard things is not only possible, it creates often insurmountable obstacles to competitors and adversaries.

Managing for peak performance is one of the most difficult tasks you’ll ever attempt.  Whether your business is large or small, and whether you have major development projects in progress or simply want someone to handle training for three people, the formula for managing technology routinely eludes most people.

The first key to managing is recognition that management is the wrong word and the wrong premise.

I’ve always taken the somewhat extreme position that few things of real worth were ever built, assembled, found or perfected by managers.  True excellence in any field comes from differentiating between managers and leaders.

Once that step is made, it’s possible to do truly great things.  An army lead by managers is composed of conscripts and mercenaries because the people actually doing the work neither wholly believe in nor accept the cause for which they labor.

Likewise, projects or offices staffed by people who just put in their time as long as their paychecks keep coming are ultimately destined for mediocre results from partial commitments and average efforts.

Only when an army is truly led, and when the efforts of the participants are measured by the fact that they wish they could do more, do conscripts become patriots.

In a business sense, the ability to go beyond what everyone else is doing or to take a giant step is driven by personal commitments from exceptional people–the kind who will do anything for the right leader.

Leadership is so elusive that you almost never see it in business. No doubt you can think of many people who have been reasonably successful while managing.

But if you know of anyone who did something extraordinary in business–developed a radically new product, launched an enterprise with no capital and little experience, or did what others had tried to do and failed–chances are part of the reason is that this individual stopped managing and started leading

Given enough money, time and staff, you can complete a project and get workable results–results that also will be fairly common (uncreative), rigid and not years ahead of the competition, by managing people who simply put in time.

Most businesses find this formula too expensive and limiting to be useful.

Achieving the exceptional result–something very difficult to replicate and extremely valuable to your business–depends on attracting, motivating, leading and keeping the right people. Don’t blame the staff for the lesser result–the fault is usually at the top.

Ernie Pyle, the great World War II news correspondent, once wrote that the success of any enterprise is determined by the morale of the group. Morale, he said, depends on two factors: commitment to the team and complete confidence in its leaders.

  • A leader stands at the head of the group and asks the other members to follow as he addresses the tasks before them.  A manager asks the group members to work as hard as they can, but measures his own success by different standards.
  • A leader doesn’t ask anyone to do things he hasn’t or wouldn’t do it himself. A manager thinks most jobs are for underlings and that he has “special skills.”.
  • A leader shows the kind of genuine commitment to the project he expects everyone else to show; by implication, he wouldn’t be involved if he didn’t believe in the project. A manager just follows orders and puts in time.
  • A leader has the highest professional and personal standards. A manager will often tell others to do what it takes to get by.
  • A leader holds his position because he’s shown he has what it takes to get the job done.  A manager often occupies his position because he’s been there the longest, knows somebody or just happened to be appointed to the position.
  • A leader doesn’t necessarily know everything, but as long as he can apply the skills of other experts, the project can succeed.  A manager feels he might fail personally if someone else is shown to know something he perhaps should.
  • A leader puts the project first–if it fails he fails. A manager usually has somewhere else to affix blame.

The biggest problems to be faced in any type of project are almost always management, and not operations-based. To successfully overcome them, you don’t need smarter people: you need to become the type of person smarter people will follow.  You and I can both look at most organizations in our industry and see that they’re not performing at peak efficiency.

Morale, something most managers never seem to notice, is among the primary indicators.  Leadership doesn’t wholly take the place of money, or the right tools, or skilled professionals, but it does give these elements a chance to do something really useful.

You can produce real competitive advantages, but you’ll rarely ever succeed until leadership becomes first priority.